Oil Traders Prepare Flotilla to Ship U.S. Exports to Asia
Oil traders and major producers are lining up a flotilla of carriers to ship more U.S. crude to Asia in December than in nearly two decades as higher prices, supported by OPEC's proposed supply cuts, offer a rare opportunity to boost sales to the region.
A 40-year U.S. ban on crude exports was lifted in 2015 but only a few cargoes have shipped during a global glut in supply. The Organization of the Petroleum Exporting Countries last week agreed to its first supply cut in eight years as the cartel sought to end the two-year glut.
As peak winter demand kicks in, the difference between benchmark crude prices in the United States, Asia and Europe has widened to the most since August and opened up the trade route.
"I think Asia is going to pull lots of U.S. oil," one trader said on condition of anonymity as he was not authorized to speak publicly on trading. "There's lots of interest in this."
Trading houses and oil majors are lining up ships that could take as much as 7 million barrels to Asia, traders and brokers said. But actual shipments may be less as increased supplies make exports less profitable.
So far, more than 2 million barrels of crude have been chartered to China in December by Chinese state-owned oil traders PetroChina and Unipec, three sources with knowledge of the matter said on Friday. They requested anonymity because they were unauthorized to talk to the media.
Those two cargoes would fall short of the record volume of oil departing to China, reached in January 1997, by the equivalent of just one vessel, according to U.S. government data.
"We haven't exported a lot previously to Asia because there's a lot of costs, a lot of logistics and there's always been OPEC," said Carl Larry, director of business development for oil and gas at Frost & Sullivan.
"We're fairly new to this export game, but once we figure it out, we'll make it work. The U.S. looks to be pushing out as much as we can."
The flow of oil will help drain U.S. inventories, which are some 32.2 million barrels higher than the same time last year and a concern for OPEC.
Saudi Arabia has told U.S. customers that it would reduce supply in January as part of that deal, and was singling out the United States for the biggest cuts because of inventories, said a Gulf oil industry source familiar with Saudi policy.
U.S. inventories touched 485.8 million barrels in the week through Dec. 2, according to U.S. Energy Information Administration data. This was some 32.2 million barrels more than a year ago and 137.4 million barrels more than in 2014.
The spread between U.S. West Texas Intermediate (WTI) crude and Brent crude, the global benchmark WTCLc1-LCOc1, stood around $1.85 a barrel on Friday and hit $2.29 on Tuesday, the widest since August.
A narrowing of the spread between Brent and Middle East Dubai crude DUB-EFS-1M to the smallest in a year also made U.S. oil more competitive than similar Middle East grades.
But the Saudis have not reduced supply to the world's fastest growing demand centers because it does not want to lose customers there. That means demand for additional U.S. supplies would be limited and spreads between prices would likely narrow as more crude cargoes are set to move east.
PetroChina has chartered the London Spirit, a Suezmax which loaded some crude in the Galveston Offshore Lightering Area (GOLA), Texas, earlier this month, according to the sources and shipping data on Thomson Reuters Eikon.
Unipec, the trading arm of Asia's largest refiner Sinopec, is expected to load 2 million barrels of U.S. crude onto very large crude carrier (VLCC) Xin Han Yang next week, one of the sources said.
The shipments would come on top of nearly 3 million barrels that BP has sent to Asia as oil traders sell growing supplies of cheap U.S. shale oil to the region of the world that consumes the most crude.
It will be Unipec's second shipment of U.S. crude in three months. In October, the company loaded oil on VLCC Overseas Rosalyn which is expected to reach the southern Chinese port of Zhanjiang on Dec 31.
Source: www.reuters.com
Shale Revolution that Shocked U.S. Markets Heads to Japan
The U.S. shale revolution that turned North American energy markets upside down is finally headed to the world’s largest consumer of LNG: Japan.
Jera Co., a joint venture (JV) between Tokyo Electric Power Co. Holdings Inc. and Chubu Electric Power Co., will get its first LNG cargo produced from the formations in early January, spokesman Atsuo Sawaki said. It would be the first supply to reach the Asian nation from Cheniere Energy’s Sabine Pass terminal.
The shipment brings to fruition a contract signed more than two years ago. While U.S. exports are still relatively small, they are having an impact because the contracts are tied to U.S. natural gas prices instead of crude oil that most of the LNG coming to Japan is linked to. They also allow for switching of cargo destinations—a key concern for importers, such as Japan, that are pressuring producers for more flexibility.
“The first U.S. cargo marks a turning point,” Kerry Anne Shanks, an analyst at Wood Mackenzie, said by email. “Japan’s LNG imports are almost exclusively priced on an oil-index price. U.S. LNG provides much needed index diversification of Japan’s LNG price.”
About 70,000 metric tons of LNG produced at the Sabine Pass terminal was loaded onto the Oak Spirit vessel on Dec. 7, according to Sawaki. Jera has a short-term deal with Cheniere to receive as much as 700,000 tons of LNG from July 2016 to January 2018.
Greater Flexibility
Japanese companies have contracted about 14 million tons of LNG on long-term contracts that begin between 2017 and 2022 from U.S. projects in the lower 48 states, according to a November presentation by the Japan Oil, Gas and Metals National Corp.
Japan, China and South Korea, which account for more than half of the global LNG trade, will be oversupplied by about 20 Bcm in 2017 to 2018, the International Energy Agency said in a report earlier this year.
Japan is probing whether destination restrictions in most of its LNG contracts violate fair trade laws. LNG sellers will benefit by allowing buyers more flexibility to resell cargoes because it will make the market more efficient and stimulate demand, Jera Chairman Hendrik Gordenker said in a Dec. 1 interview.
Cheniere’s Sabine Pass terminal shipped the first U.S. LNG cargo produced from shale in February to Brazil.
Source: www.reuters.com
U.S. Slated to Sell $375 million of Emergency Reserve Oil this Winter
The U.S. government is slated to sell $375 million worth of crude oil from the country's emergency reserve this winter after Congress passed a temporary spending bill on Friday that contained a measure authorizing the sale.
President Barack Obama's administration has pushed Congress to approve an up to $2 billion plan for a revamp of the Strategic Petroleum Reserve, a string of heavily guarded underground salt caverns along the Gulf of Mexico filled with crude. The stash currently holds about 695 million barrels of oil.
A Department of Energy spokeswoman said authorization in the spending bill "will allow the Department to take necessary steps to increase the integrity and extend the life" of the reserve.
Congress passed the original funding for the reserve after the 1973 to 1974 Arab oil embargo to protect the country from global supply disruptions that have the potential to spike domestic fuel prices and damage the U.S. economy.
Many of the reserve's steel tanks and pumps are now rusting after decades of being whipped by storms and exposed to salt air. A plan submitted to Congress by the Energy Department in September said "this equipment today is near, at, or beyond the end of its design life."
In addition, the U.S. oil boom of the last decade has reversed the direction of many pipelines away from the reserve, making it more difficult to get oil to market in a hurry.
The $375 million sale, or nearly 7.3 million barrels of oil in today's price, is just the first planned installment. For each of the next three fiscal years Congress would have to approve the annual sales to reach the up to $2 billion revamp plan. It remains to be seen whether President-elect Donald Trump would urge Congress for the annual authorizations in the coming years.
This sale, which could take place seven to nine weeks after the temporary spending bill is enacted, would pay for the design of the revamp of the SPR and other pre-construction costs. Further sales would pay for construction of new equipment and new marine terminals to allow the reserve greater capacity to ship oil by vessels.
Source: www.reuters.com
Update: Coastguard Calls Off Sea Search Near Aberdeen
Aberdeen Coastguard has confirmed it has called off it's sea search off the coast of Aberdeen.
A spokesperson for Aberdeen Coastguard has confirmed that after extensive searches of the Aberdeen coast, they believe the matter to be a false alarm and have called off the search.
The search was initiated after an automated alert was received from a Personal Locator Beacon that broadcasts on an international emergency frequency.
After an initial sweep of the area by Aberdeen Lifeboat and a joint sweep of the area with both Aberdeen and peterhead lifeboat, the spokesperson said they were satisfied that there was nobody in the water.
Earlier today when discussing the alarm an MCA spokesperson said: “It was set off by a device they might have on a life jacket but we received no voice calls, no radio transmissions and so no location details are there.
“It’s probably a maximum of a few miles off Aberdeen
“It could potentially be a faulty piece of equipment or something’s been set off by mistake or someone’s gone over board.'
‘If Russia & Saudi Arabia Lead, Rest will Follow’: Saudi Energy Minister on Historic Oil Deal
The deal between OPEC members and oil exporting countries from outside the group could bring more stability to the oil market for the common benefit, Saudi energy minister, Khalid Al-Falih, told RT, praising the role of Russia in the agreement.
The Saturday meeting of the members of the Organization of Petroleum Exporting Countries (OPEC) with 12 oil exporting countries outside the group “is significant because [it] has brought so many countries together for the first time,” Al-Falih said.
Al-Falih stressed that the total volume of oil produced by the countries that attended the meeting is close to 53 million barrels per day out of a total of roughly 90, so their share in the world’s oil production approaches 60 percent. He went on to say that the share of the countries that took part in the negotiations in Vienna on Saturday is even greater in the total volume of oil that is traded because “oil produced by the countries that were not represented at today’s meeting is mostly consumed within the countries that produce it.”
The minister welcomed the agreement on the oil production reduction and hailed Russia’s commitment to the deal.
“This meeting gave us understanding that we are all in the same boat, we all benefit [from being] together while [our attempts] to take advantage of each other” eventually hurt the market, he said, adding that this agreement showed that the OPEC and non-OPEC countries “were able to build trust.”
He then stressed that the parties to the agreement have to reinforce this mutual trust by ensuring the maximum compliance with the agreement and expressed his hope that Russia will take one of the leading roles in this process.
Al-Falih particularly said that he trusts the word of the Russian Economy Minister Aleksandr Novak and expressed confidence that Russia will comply with the terms of the deal.
“If Russia and Saudi Arabia lead, the rest will follow,” he stressed.
He then said that he “does not expect the US government to react to this in any way” to the Saturday deal as it has “not reacted in the past and let the market respond.”
At the same time, Al-Falih expects oil producers in the US to “respond to the higher prices and more stability” which will result in “healthy” development. Saudi Arabia welcomes the development of the oil industry in the US, as it “has been a center of innovation” and provided “new cost-efficient technologies”, so the Saudis want it to be “competitive and healthy.”
On Saturday, twelve non-OPEC countries, including Azerbaijan, Oman, Mexico, Sudan, South Sudan, Bahrain, Malaysia, Equatorial Guinea, Bolivia, Kazakhstan and Russia, agreed to cut oil production by 558,000 barrels per day (b/d) under the deal with the OPEC members.
OPEC members also confirmed their commitment to the plan to reduce the oil supply by 1.2 million b/d. This, together with the commitments made by non-OPEC states, would lead to the total reduction of oil production by about 1.7-1.8 million b/d, Russian Energy Minister Aleksandr Novak said at the press conference.
The commitments taken by both OPEC and non-OPEC countries put an end to the ’pump-at-will’ policy the group has conducted since 2014, which sent oil prices down from $100 to less than $50 a barrel. Now, both OPEC and non-OPEC oil exporters are trying to push prices up.
Source: www.reuters.com
Coastguard Asks All Vessels Off Aberdeen To Count POB - Sea Search Ongoing
A sea search is ongoing off the coast of Aberdeen after the Coastguard received a man overboard distress from a Personal Locator Beacon at around 4:10pm today.
The RNLI Lifeboat is patrolling the waters to the North and south of Aberdeen in an effort to locate anybody who may have fallen overboard.
An MCA spokeswoman said: “It was set off by a device they might have on a life jacket but we received no voice calls, no radio transmissions and so no location details are there.
“It’s probably a maximum of a few miles off Aberdeen
“It could potentially be a faulty piece of equipment or something’s been set off by mistake or someone’s gone over board.
“We don’t know.”
A Marine Personal Locator Beacon is a device that automatically activates on contact with water and immediately transmits a distress signal on the 121.5 MHz frequency - it can also be manually activated.
The lack of certainty has resulted in the coastguard taking the rare step to broadcast to all ships in the area and request that they perform a headcount to ensure all POB are present.
The coastguard have also been dealing with an offshore med-evac from a Wood Group Operated Platform as a worker took ill and required to be transferred to Aberdeen Royal Infirmary.
CHC to Provide Additional Aircraft for Shell’s Prelude Development
CHC Group has announced that three new Sikorsky S-92 aircraft will begin serving Shell for the company’s Prelude FLNG project from its base in Broome, Australia. These new aircraft will join a fourth S-92 already in use as part of a two-year extension of the current Shell contract in place since mid-2012.
Shell Australia’s Prelude FLNG project will be one of the first to produce natural gas at sea from offshore production platforms, and will then transfer it to a fleet of specialized ships for product transportation directly to customers. By using this process, Shell will use significantly less materials, land and seabed than developing the same gas reserves via a similar onshore facility while also reducing the impact on sensitive coastal habitats.
Source: www.reuters.com
Worlds Largest LNG Company Created After Qatar Merger
Qatar Petroleum (QP) is to integrate the activities of RasGas and Qatargas operating companies under a single entity, Qatargas, which will operate all of the ventures being operated by both entities.
Saad Sherida Al-Kaabi, president and CEO of QP, made the announcement at the company's headquarters in the presence of representatives of the main international shareholders in both companies including Exxon Mobil, Total, ConocoPhillips, and Shell, and the CEOs of Qatargas and RasGas.
The process of combining Qatargas and RasGas into a single entity, to be named Qatargas, will start immediately, with completion expected within 12 months, and will create the world's biggest LNG company by a large margin, Qatar Petroleum's president and CEO Saad al-Kaabi told reporters in Doha.
al-Kaabi said: “The integration aims to create a truly unique global energy operator in terms of size, service and reliability.”
He told reporters that the integration of the activities of these two energy centers of excellence means that upon completion, there will be a single expanded and enhanced operating entity, named Qatargas, that will operate all of Qatar’s LNG ventures.
“The collective resources, talents, and capabilities of two global leaders will be joined to create an even more effective and efficient organization to uphold the best interest of the State of Qatar, our customers and our shareholders,” Al-Kaabi added.
The integration process is planned to start immediately and is expected to be completed within the next 12 months.
Source: World Oil
Asset Integrity Group Launches Into Market Despite Oil Price Dip
Asset Integrity Group Ltd have announced the official launch of the company after successfully securing their first project in Aberdeen.
The Aberdeen-based Asset Integrity consultancy which started in August 2016, boasting a team of professionals who collectively offer in excess of 250 years’ experience, have so far achieved a healthy five figure turnover months after securing an initial project supporting a local operator. This has aligned Asset Integrity Group to surpass its projected targets 6 months ahead of schedule whilst actively bidding for projects throughout various industries including oil and gas and renewables.
This achievement is a credit to the determination of the Directors David Noble and William Mclean, who created Asset Integrity Group and are both experts in reliability, maintainability and risk reduction. Their success is even more notable as it comes at a time when the energy sector has seen a substantial decline in activity and budget spending has been slashed.
William McLean explains, “We are very pleased with our achievements to date, not just on a personal level but also on our progress in establishing a successful independent Asset Integrity consultancy at such a difficult time.
“The low oil price has taken a strong hold of the North Sea Oil and Gas sector over the last two years affecting exploration, production and other operations, with many companies facing real challenges. In some cases, our clients have found that they have been able to use this time to really focus on the condition and integrity of their vital assets, ensuring that performance is not compromised once projects scale up again”.
With current Oil prices sitting at less than $54 per barrel, oil operations have been forced to reduce spend and ensure that the cost of production is at a sustainable level. This has seen the demand for asset integrity services increase, due to the need to create well engineered solutions that ensures maximum uptime of assets.
Dave Noble outlined the plans for Asset Integrity Group over the next twelve months, “2017 is set to be an exciting one for us. We are currently engaged with a number of businesses who are looking to implement our services into various project work scopes, which will allow Asset Integrity Group to predict workflow as we introduce and promote our highly innovative services to the marketplace.
“Our technical team are exceptionally well placed to support a range of client requirements including risk reduction management, incident investigation, maintenance optimization, reliability engineering for uptime excellence and asset life extension. With each of our consultants concentrating on specialist areas, we can offer a more focused approach to Asset Integrity and a strong commitment to our O&G North Sea Operators which is where our core experience lies”.
U.S. Operators Put 27 More Rigs in the Field
Operators in the U.S. added 27 rigs this week, according to the latest data from Baker Hughes. The number of rigs seeking oil rose 21 to 498, the highest level since January.
The Permian basin, home to nearly half of the nation’s active oil rigs, saw the addition of 11 rigs for a new total of 246. Meanwhile, the Eagle Ford shale and DJ-Niobrara added three rigs and six rigs, respectively.
The number of rigs seeking gas rose six to 125, while miscellaneous rigs held steady at one for a total rig count of 624.
Source: Worldoil
Singapore Offshore: Barely Hanging On
It’s been one of the worst years in memory for anyone in Singapore connected to oil and gas.
On November 25 the Singapore government stepped in with a $1.1bn package to protect the nation’s hard hit offshore marine sector. For thousands of citizens made redundant from the sector the move came too late. Arguably, no other industry in Singapore has been more hard hit than offshore this year.
The measures include boosting International Enterprise (IE) Singapore’s finance scheme and the reintroduction of government backed bridging loans.
The bridging loan scheme will help Singapore-based companies borrow S$5m each for a tenure of up to six years to finance their operations and bridge short-term cash flow gaps. In addition, IE’s existing Internationalisation Finance Scheme (IFS), which provides project/asset financing support for companies, will be enhanced, the release stated.
For bridging loans, the maximum loan quantum for each borrower group will be S$15m, while for IFS it will be raised to S$70m per borrower group from the current S$30m. The government will take on 70 per cent of the riskshare for both measures.
Shipyards, contractors, the struggling offshore sector, exploration and production companies, oil and gas equipment and services companies and suppliers, can all apply for these schemes.
The minister for trade and industry S Iswaran commented: “While there has been a general slowdown in economic growth, the impact has been uneven. The marine and offshore engineering industry, in particular, is facing a deep and prolonged downturn due to cyclical and structural forces. Consequently, the industry’s financing challenges have intensified in recent months. Some industry consolidation is inevitable as companies restructure.”
The move by many Asian governments – including in China, South Korea and Taiwan – stepping in to support shipping lines and shipyards in recent months has proved controversial with many suggesting the state interventions will only serve to lengthen the shipping and offshore downturn. A survey carried in the most recent issue of Maritime CEO magazine found that 76% of the more than 600 respondents were against government interventions into the sector.
Ferocious storm
“We are navigating a storm like we have never seen before and the end is not in sight.” That’s the words of respected offshore broker Mike Meade.
On the capital side of the business M3 has seen too many ships being built with no buyers and values dropping off 40%+. On the chartering side the brokerage saw the utilisation of assets plummet along with charter rates.
Meade observes that distress sales are now coming in thick and fast as there are no willing buyers at reasonable market values.
“This is the start of what I can see as real pain for some owners, especially those with older equipment,” Meade says. The definition of older equipment has swiftly moved from 20 years down to 10 with some new equipment out of China being sold at distress levels, he warns.
Singapore has been rocked by many offshore firms seeking judicial management this year – including Technics Oil & Gas, Swiber Holdings and Swissco.
Meade saw the downfall of Swiber Holdings, an oilfield services company which filed for judicial management in July, a long way off. He describes the demise of the firm as Emperor’s New Clothes syndrome.
“The knock on effect of Swiber is the negative sentiment it has brought to the market, especially to those undercapitalised and over leveraged companies out of Singapore and to some extent Norway, which was already evident,” Meade says.
Swiber sets the news agenda
Swiber’s messy decline – initially going for liquidation then pulling an about turn and opting for judicial management – set investment circles on high alert. The company is now under investigation by the authorities for its financial disclosures in the run up to its downfall.
Swissco followed suit last month after reached what it described as an “impasse” with lenders.
“A significant gap persists between the group’s aim of sustaining its business in the long term and the position of these lenders,” Swissco explained.
Swissco, originally an OSV operator, diversified into rigs in mid-2014 just ahead of global oil prices plunging. Swissco is weighed down by $147.5m in debts with just $1.2m in cash, unable to make key repayments.
When Swiber filed for judicial management in July it sent many other Singapore offshore stocks into a tailspin.
“The OSV market and marine service provider market is becoming increasingly messy and under financial pressure. This step by Swissco will place increasing pressure on the likes of Ezion Holdings and Triyards, both of which have interests in Swissco. I don’t think it is going to be too long before we start getting a domino effect in Southeast Asia with companies soon to collapse under the financial strains,” says Splash offshore columnist Andre Wheeler.
Speakers at this August on Splash Chat told readers Swiber’s fall was widely seen ahead of time by Singapore’s offshore community.
“Swiber was a train wreck in slow motion,” commented Venkatraman Sheshashayee, CEO of Miclyn Express Offshore.
“The reality is the balance sheets of these companies cannot meet their debt / bond commitments. Working capital was used to grow bad businesses and with reduced revenues they don’t have the cash to survive let alone pay debt,” said M3’s Meade.
A survey carried by Singapore’s Business Times four months ago showed the precarious financial state of many of Singapore’s offshore listed firms.
Business Times drew on data released as of August 19 on Bloomberg, latest company results, and analyst reports.
Of the 14 companies on the list, 12 has short-term debt of over S$100m ($73.5m), 10 had negative/low cash flow, and nearly all were highly geared.
The 12 companies highlighted as having high short-term debt levels are ASL Marine, Ausgroup, Ezra Holdings, Ezion Holdings, KS Energy, Mencast, Marco Polo, Nam Cheong, Pacific Radiance, Vallianz and Vard Holdings.
“[T]ime may just not be on the side of many small and mid-cap industry players,” the report warned.
Since then the Singapore Exchange (SGX) has been cluttered with frenzied announcements from other offshore names trying to defend the state of their stretched balance sheets.
Pacific Richfield carved up
This July Seacor Marine bought 11 AHTS vessels from Singapore’s Pacific Richfield, according to brokers Fearnley Offshore Supply.
Pacific Richfield put its entire 40-strong fleet up for sale at the end of last November as part of what it termed as a “restructuring exercise”, while brokers in Singapore described the move at the time as a distressed asset sale.
The vessels bought by Seacor will be gradually reactivated from present layup status and renamed with a Seacor prefix.
“We expect Seacor to mobilise some of the vessels to Middle East and West Africa,” the broker anticipated.
Indonesian national Rony Sudjaka founded Pacific Richfield in 1989. Sudjaka’s father worked in Hong Kong at the old Taikoo Shipyard from 1926, before moving back to Indonesia to do contracting work.
Sudjaka himself, now 80, has been in the OSV business for more than half a century.
Meanwhile, at the end of October Singapore offshore shipbuilder and vessel owner ASL Marine Holdings applied to the Singapore Exchange for a one month extension to both hold its AGM and release its latest set of quarterly results, a sure sign of difficulties.
Similar in business scope to ASL, Otto Marine has been taken over this year and delisted. Ocean International Capital, owned by Datuk Seri Yaw Chee Siew, Otto’s executive chairman and controlling shareholder, took over Otto and delisted the company in September.
Elsewhere, under pressure Ezra Holdings received a fillip at the end of September when Japanese shipping major Nippon Yusen Kaisha (NYK) came in for a 25% stake in Emas Chiyoda Subsea, joining Ezra and Japan’s Chiyoda Corporation.
“NYK’s participation in this JV will enable us to tap into the Japanese market and NYK’s wealth of experience in vessel operations around the world,” commented Lionel Lee, group CEO and managing director of Ezra, a man who has to had to fight off plenty of investor disdain this year.
Other partnerships have floundered however. In October, for instance, Sovcomflot and Singapore’s Swire Pacific Offshore ended a three-vessel joint venture established in 2006, resulting in the Russian company acquiring two multi-purpose icebreaking platform supply vessels from Swire.
Sovcomflot has acquired the Pacific Endeavour and Pacific Enterprise, Swire’s contribution to the JV, and now exclusively owns, operates and manages all three vessels previously part of the joint venture.
Bright spots
There have been some brighter spots however. Take May 30 and the delivery of a first vessel for Tasik Subsea, a new subsea services company set up by former Hallin Marine boss John Giddens and M3 Marine’s Meade. The pair were on hand in China to watch the diving support vessel Southern Star slide down the slipway. The vessel now goes on a five-year bareboat charter.
During the launch ceremony, Giddens commented: “At the outset we decided to build a technically advanced, cost effective vessel whilst working closely with the charterer from the start. Those decisions have been vindicated by the economic challenges that face our industry today as a result of low oil prices and the general slowdown in the marine industry.”
Then there is the news of Shel Hutton and his 2014 founded company, Ultra Deep Solutions (UDS).
UDS now has four vessels on order and is looking to sign another three to four contracts in the coming 12 months. This includes subsea vessels not just dive support ones.
“UDS,” Hutton insists, “will have one of the youngest fleets in the world at the lowest cost.”
Singapore-listed Atlantic Navigation, meanwhile, place orders earlier this year with a Chinese shipyard for seven newbuild offshore vessels to support five-year charters it has won from a Middle Eastern national oil company. The order consists of five utility and two AHTS vessels, which will all be deployed in the Arabian Gulf upon delivery, scheduled for the third quarter of 2017.
One of the prominent names on Splash Chat's offshore discussion mentioned earlier was Miclyn Express Offshore’s (MEO) Venkatraman Sheshashayee (better known simply as Shesh). In the top job since April last year Shesh is determined to forge MEO into a top 10 OSV global player.
“We are determined to achieve our strategic vision,” he tells reporters, “to become a globally reputed group, in the world’s top ten, measured by fleet size, EBITDA and RoI, as well as by safety performance and operational uptime. We hope to become a market leader in crewboats, a preferred partner in project solutions, and the provider of choice of general and specialised offshore support vessels.”
Finally in this slight chink of light for Singapore’s beleaguered offshore scene, mighty Navig8 Group established its own fleet of offshore support vessels through the acquisition this April of Singapore-headquartered RKOffshore Management (RKOM).
RKOM owns 19 anchor handling tug support (AHTS) vessels, plus two newbuildings. It has another AHTS and a diving support vessel under management.
“We believe current dynamics within the energy exploration and production industry have created a unique opportunity for Navig8 to extend its commercial and technical services to the offshore energy sector,” said Nicolas Busch, CEO of Navig8 Group.
No yard solace
The clamour continues to rise to get the republic’s top two yards – fierce rivals Keppel and Sembcorp – to merge.
Both have been hard hit by low oil prices as well as the massive corruption scandal surrounding Petrobras in Brazil. The pair have shed thousands upon thousands of jobs in the past 18 months. With offshore orders plummeting both companies have had to rely on more repair work to fill berths.
In other key yard news pertaining to these two dominant brands in the sector, Sembcorp Marine this year completed buying out local firm, PPL Shipyard. Sembcorp Marine also divested itself of its 30% stake in China’s Cosco Shipyard Group.
This article first appeared in our fourth annual Singapore Market Report – a 28-page magazine that launched last week. Through splash 24/7, readers of Oil and Gas People can access the full magazine for free online by clicking here.
Source: Splash 24/7
Oil Platform Decommissioning Plans Up for Public Consultation
Decommissioning plans which could see the giant legs of three offshore oil platforms left in the North Sea are to go before a public consultation early next year.
Shell has lodged documents with the UK Government's Department for Business, Energy and Industrial Strategy (BEIS) to close down four platforms in the Brent field, which started producing oil about 115 miles east of Shetland 40 years ago but is said to be ''no longer economically viable''.
Earlier this year, the oil company said it would seek an exemption to leave platform legs - said to weigh about 300,000 tonnes - on safety grounds.
The latest report from Shell said the "footings" of the Brent Alpha platform would be left under sea level while the steel and concrete legs of the other three larger platforms - Bravo, Charlie and Delta - would remain under current plans.
The report said: "Each structure which supports the topsides above the surface of the sea weighs 300,000 tonnes, roughly the same as the Empire State Building.
"We have analysed a long list of options for the gravity base structures (GBS) such as re-floating, partial removal or leaving them in place.
"Our recommendation is that the safest and most responsible solution is to leave the GBS legs and oil storage cells in place, marked with navigation aids so they are recognisable to shipping, fishermen and other users of the sea."
A spokeswoman said: "Shell is liaising with the BEIS and expects the public consultation on the Brent decommissioning programme to commence in the new year."
WWF Scotland believes the legs could pose an environmental risk if left in the North Sea.
Director Lang Banks said: "It's good to have greater clarity around the timings regarding the public's opportunity to comment on the potential environmental impacts of Shell's proposals.
"It's also good that the formal consultation period will begin after the holidays and not before, hopefully allowing the public more time to respond.
"While removing these structures is not without environmental risk, neither is leaving them lying on the seabed to slowly break down over hundreds of years.
"Given the potential impact on the marine environment, we will be carefully examining the proposal that goes out for consultation.
"The industry pushed the boundaries of science and engineering to access North Sea oil and gas.
"Having made massive profits over the last few decades, it's only right that it should push those limits once again to clean up their potentially hazardous legacy and protect the marine environment."
The latest Shell update revealed Nasa has been involved in the decommissioning process with a camera and scanner used to inspect space shuttles sent down to investigate the legs of the Brent Bravo platform.
Nasa engineer Darby Magruder, who dived to the depths of the North Sea with the probe, described it as "just like being an astronaut".
Source: www.reuters.com
Oil Seen Headed To Over $60 as Saudis Signal Deeper Output Cuts
Oil may climb to $60/bbl for the first time in almost a year and a half after Russia and other unaffiliated nations joined an OPEC pledge to reduce production and Saudi Arabia surprised the market by saying it will cut more than previously agreed.
Non-OPEC nations said Saturday they will reduce output by 558,000 bpd, adding to a Nov. 30 OPEC commitment to cut 1.2 MMbpd starting in January. Brent crude has surged more than 20% since OPEC announced its first cut in eight years. Prices jumped as much as 6.6% to $57.89/bbl in early Monday trading.
The agreement is the first between OPEC and non-OPEC producers since 2001. It underscores the resolve to end a market-share war that exacerbated a global oversupply and caused prices to slump by 75%. The OPEC and non-OPEC plan encompasses countries that pump 60% of the world’s oil but excludes producers such as the U.S. and Canada, which have benefited from the boom in shale output, as well as China, Norway and Brazil.
“This is an unprecedented event,” said Thomas Finlon, director of Energy Analytics Group in Wellington, Florida. “The 558,000 barrel decline from non-OPEC together with the OPEC agreement will total 1.8 MMbpd of cuts, which is about 2% of global production. This is enough to have an impact.”
Russia had already announced it plans to trim output by 300,000 bpd next year, down from a 30-year high last month of 11.2 MMbpd. At the meeting, Mexico pledged to cut 100,000 bpd, Azerbaijan by 35,000 bpd and Oman by 40,000 bpd, a delegate said.
The non-OPEC reduction is equal to the anticipated demand growth next year in China and India, according to data from the International Energy Agency. Oil officials said Mexico’s contributions would be made through “managed natural decline” meaning the Latin American nation will not cut output deliberately, but will let production fall as its aging fields yield less. Other countries, such as Azerbaijan, are likely to follow the same route for their cuts.
The joint commitment “marks a turning point for oil markets,” said Francisco Blanch, head of commodity markets research at Bank of America Merrill Lynch, in a telephone interview. “Shale producers may increase activity, but it will take at least 12 months for those barrels to come into the market. Meanwhile, OPEC barrels will exit global markets on Jan. 1.”
“I can tell you with absolute certainty that effective Jan. 1, we’re going to cut and cut substantially to be below the level that we have committed to on Nov. 30,” Saudi Energy Minister Khalid al-Falih said after Saturday’s meeting.
10 Million Barrels
Riyadh’s portion of the OPEC agreement last month was a production cut to 10.06 MMbpd, down from a record high of nearly 10.7 MMbpd in July. The Saudi minister said he was ready to cut below the psychologically significant level of 10 MMbpd—a level it has sustained since March 2015—depending on market conditions.
“The Saudis’ latest deal with non-OPEC countries could potentially boost Brent crude price toward $60 this week,” said Gordon Kwan, head of Asia oil and gas research at Nomura Holdings Inc. in Hong Kong.
Some analysts questioned if some of the producers would adhere to the promised cuts, particularly Russia, which accounted for more than half of the non-OPEC commitment.
‘Playing Wall Street’
“OPEC is playing Wall Street very well,” Stephen Schork, president of the Schork Group Inc., a consulting company in Villanova, Pennsylvania, said by phone. “The Russians have a completely horrible track record of abiding by these type of agreements. OPEC will be lucky if you see two-thirds of this agreement honored. I’m highly skeptical that the Saudis are going to play nice and cede further market control to the Iranians.”
Brent sank to near $27/bbl in January as surging output from OPEC and other sources, notably U.S. shale, pushed inventories up faster than demand.
“Strong compliance” rather than “full compliance” could still have “a meaningful impact on price,” Jason Schenker, president of Prestige Economics LLC in Austin, Texas, said in an interview.
Russia and Oman will join OPEC members Algeria, Kuwait and Venezuela on the committee to oversee implementation on the accord, a delegate said.
“Assuming reasonable compliance levels, these cuts will be enough to push the market into deficit, allowing inventories to draw and oil prices to recover towards marginal cost,” Neil Beveridge, a Hong Kong-based analyst at Sanford C. Bernstein, said by phone.
‘Limited by Leakage’
Sarah Emerson, managing director of ESAI Energy Inc., a consulting company in Wakefield, Massachusetts, also said the collaboration with countries outside OPEC would “pull the global market into balance, if not in deficit, by the second quarter of 2017” rather than in the third quarter.
The agreement will trigger “strong prices, for sure, but the upside is limited by leakage, which may be substantial as the price climbs toward $60,” she said in a telephone interview.
West Texas Intermediate, the U.S. benchmark, added as much as 5.8% to $54.51/bbl on the New York Mercantile Exchange. Front-month prices have added about 20% since OPEC announced its plans to curb supply last month.
“The market should respond very favorably to what we saw here, could push us up to new highs,” Phil Flynn, senior market analyst at Price Futures Group in Chicago, said in a phone interview. “It’s a sign that the production war that was really started two years ago is over and that OPEC and non-OPEC countries feel that they can work to raise prices and not worry about market share.”
Source: World Oil
Non-OPEC nations said Saturday they will reduce output by 558,000 bpd, adding to a Nov. 30 OPEC commitment to cut 1.2 MMbpd starting in January. Brent crude has surged more than 20% since OPEC announced its first cut in eight years. Prices jumped as much as 6.6% to $57.89/bbl in early Monday trading.
The agreement is the first between OPEC and non-OPEC producers since 2001. It underscores the resolve to end a market-share war that exacerbated a global oversupply and caused prices to slump by 75%. The OPEC and non-OPEC plan encompasses countries that pump 60% of the world’s oil but excludes producers such as the U.S. and Canada, which have benefited from the boom in shale output, as well as China, Norway and Brazil.
“This is an unprecedented event,” said Thomas Finlon, director of Energy Analytics Group in Wellington, Florida. “The 558,000 barrel decline from non-OPEC together with the OPEC agreement will total 1.8 MMbpd of cuts, which is about 2% of global production. This is enough to have an impact.”
Russia had already announced it plans to trim output by 300,000 bpd next year, down from a 30-year high last month of 11.2 MMbpd. At the meeting, Mexico pledged to cut 100,000 bpd, Azerbaijan by 35,000 bpd and Oman by 40,000 bpd, a delegate said.
The non-OPEC reduction is equal to the anticipated demand growth next year in China and India, according to data from the International Energy Agency. Oil officials said Mexico’s contributions would be made through “managed natural decline” meaning the Latin American nation will not cut output deliberately, but will let production fall as its aging fields yield less. Other countries, such as Azerbaijan, are likely to follow the same route for their cuts.
The joint commitment “marks a turning point for oil markets,” said Francisco Blanch, head of commodity markets research at Bank of America Merrill Lynch, in a telephone interview. “Shale producers may increase activity, but it will take at least 12 months for those barrels to come into the market. Meanwhile, OPEC barrels will exit global markets on Jan. 1.”
“I can tell you with absolute certainty that effective Jan. 1, we’re going to cut and cut substantially to be below the level that we have committed to on Nov. 30,” Saudi Energy Minister Khalid al-Falih said after Saturday’s meeting.
10 Million Barrels
Riyadh’s portion of the OPEC agreement last month was a production cut to 10.06 MMbpd, down from a record high of nearly 10.7 MMbpd in July. The Saudi minister said he was ready to cut below the psychologically significant level of 10 MMbpd—a level it has sustained since March 2015—depending on market conditions.
“The Saudis’ latest deal with non-OPEC countries could potentially boost Brent crude price toward $60 this week,” said Gordon Kwan, head of Asia oil and gas research at Nomura Holdings Inc. in Hong Kong.
Some analysts questioned if some of the producers would adhere to the promised cuts, particularly Russia, which accounted for more than half of the non-OPEC commitment.
‘Playing Wall Street’
“OPEC is playing Wall Street very well,” Stephen Schork, president of the Schork Group Inc., a consulting company in Villanova, Pennsylvania, said by phone. “The Russians have a completely horrible track record of abiding by these type of agreements. OPEC will be lucky if you see two-thirds of this agreement honored. I’m highly skeptical that the Saudis are going to play nice and cede further market control to the Iranians.”
Brent sank to near $27/bbl in January as surging output from OPEC and other sources, notably U.S. shale, pushed inventories up faster than demand.
“Strong compliance” rather than “full compliance” could still have “a meaningful impact on price,” Jason Schenker, president of Prestige Economics LLC in Austin, Texas, said in an interview.
Russia and Oman will join OPEC members Algeria, Kuwait and Venezuela on the committee to oversee implementation on the accord, a delegate said.
“Assuming reasonable compliance levels, these cuts will be enough to push the market into deficit, allowing inventories to draw and oil prices to recover towards marginal cost,” Neil Beveridge, a Hong Kong-based analyst at Sanford C. Bernstein, said by phone.
‘Limited by Leakage’
Sarah Emerson, managing director of ESAI Energy Inc., a consulting company in Wakefield, Massachusetts, also said the collaboration with countries outside OPEC would “pull the global market into balance, if not in deficit, by the second quarter of 2017” rather than in the third quarter.
The agreement will trigger “strong prices, for sure, but the upside is limited by leakage, which may be substantial as the price climbs toward $60,” she said in a telephone interview.
West Texas Intermediate, the U.S. benchmark, added as much as 5.8% to $54.51/bbl on the New York Mercantile Exchange. Front-month prices have added about 20% since OPEC announced its plans to curb supply last month.
“The market should respond very favorably to what we saw here, could push us up to new highs,” Phil Flynn, senior market analyst at Price Futures Group in Chicago, said in a phone interview. “It’s a sign that the production war that was really started two years ago is over and that OPEC and non-OPEC countries feel that they can work to raise prices and not worry about market share.”
Source: World Oil
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